The minimum wage in Romania could become tax-free
The trade union would estimate the value of the Romanian minimum wage, which is considered to be the lowest paying salary of the EU, based on the consumer basket. Despite it being enshrined in law, the government of Bucharest does not want to consider following through with it. On the contrary, they have plans of making the minimum wages of the catering industry tax-free.
The trade union and the Romanian government are having an argument about whether to increase the minimum wage or not. The organizations representing consumers’ general and specific interests, who are threatening with a protest, want the lowest salary to be based upon the consumer basket. Currently in Romania, a gross of 2300 leu (1 leu is 72 forint) is the minimum wage, which becomes only 1386 leu (103 thousand forint) after taxing. Now, comparing this amount to what was measured to be an average four membered family’s monthly consumer basket, which stands at 7278 leu, the problem speaks for itself. Even in case of a single adult, calculations tell us that at least 2818 leu would be needed to make for a respectable living.
The center-right government of Bucharest last increased the minimum wage in January by just 3 percent which is, according to the trade union, laughable since Florin Citu, the prime minister, mentioned a 10 percent increase in economic growth, just this year, in Romania.
The guaranteed Romanian minimum wage, which equals to 472 euros, is said to be the third lowest among the members of the European Union, behind Bulgaria’s 332 and Hungary’s 467 euros, while the highest minimum wage remains Luxemburg’s 2202 euros, as stated in the research of Eurofound.
A law that underwent a constitutional control last august, ties the determination of the minimum wage’s amount to the consumer basket that is typically needed in order to maintain a respectable living, the government, however, simply chooses to ignore its existence.
“I’ve always said that the minimum wage, and all income, should be determined based on the labour productivity of each job and not on the consumer basket. This happens in the economy, all around the world.” – stated the Romanian liberal prime minister following last week’s conference, who would like to make the minimum wage tax-free in certain branches of work.
Claudiu Nasui, economic minister, also reported that from January first of 2022 the guaranteed minimum wage is going to become tax-free but only to one branch of work, the catering industry being the most likely candidate. This is not finalized, however, as they are still mulling over whether to spread this development to their whole economy, with it only being applied to certain parts of the minimum wage, which they would be steadily increasing. According to the minister, this step would lessen poverty, motivate work but at the same time, make the flow of local work force to foreign countries slow down.
Tips would be legalized
Discussion of gratification is on the agenda again in Romania: the hotel, restaurant and cafe operating HORECA branch’s employers are initiating the legalization of tips. Their argument is that the taxation of additional money given during credit card payment could lead to an amount equal to 7,9 billion forints in 2022 for the national budget. Florin Citu, head of government, agreed with legalization of gratification, but is still not sure about its taxation. Before making a decision, he would like to consult the employers involved, and ask whether they agree with the proposal or not.
